In a striking decision, Arbitrator O.B. Shime ordered an employer to pay over $500,000.00 in damages after the employer wrongfully terminated a unionized employee suspected of abusing sick leave. Extensive damages were awarded for the employer's "unreasonable" and "bad-faith" conduct.
Background
The employer, the Greater Toronto Airport Authority (GTAA) closely monitored employees on sick leave after a rash of costly fraudulent sick leave absences were discovered within the company.
The grievor had been employed by the GTAA for over 23 years with no record of discipline. Months after a work-related injury, she underwent knee surgery and was given an expected recovery time of four weeks. Unbeknownst to the company, the grievor was living with another GTAA employee who was under surveillance watch at the time for an unrelated disciplinary issue. The surveillance obtained by the company raised suspicions as to the legitimacy of the grievor's absence.
The grievor was seen driving and walking through stores without any obvious indications of her alleged recovery process. The GTAA requested medical documentation to verify the grievor's condition, and subsequently the grievor returned to work. GTAA believed that the limp she displayed during her first day back at work was further evidence of fraud and confronted the grievor. During the course of a meeting, the GTAA concluded that the grievor exhibited inconsistent behaviour and insincerity about her injury and absence. The grievor was terminated.
Arbitrator's decision
The Arbitrator held that the employer has an obligation to act in good faith with respect to the administration of the collective agreement. The GTAA was found to have acted egregiously and in bad faith by acting prematurely and not conducting a full investigation of the situation. The decision strongly criticizes the employer for not obtaining medical corroboration before proceeding with the penalty. Moreover, the employer was penalized for not considering a lesser penalty given the grievor's history.
The following remedies were awarded:
- all record of the incident to be removed from the grievor's file; GTAA prohibited from discussing the matter; a positive letter of reference to be provided;
- mental distress: award of $50,000.00;
- lost wages to the date of the award;
- future economic loss damages for loss of seniority, pension and other benefits reflecting years of service and the likelihood that the grievor would have retired from the company; and
- punitive damages: award of $50,000.00.
Reinstatement was not considered appropriate due to the employer's "high-handed, arbitrary and capricious" conduct.
The GTAA has applied for a judicial review of the decision.
What this means for employers
This case reads as a cautionary tale for employers when executing disciplinary measures subject to the applicable collective agreement:
- Employers should verify any suspicions and corroborate with professional opinions where possible.
- Employers must apply progressive discipline and carefully consider an employee's history before making decisions about discipline — particularly termination, which should be a last resort.
- Management rights must be applied in a good faith manner.
A note about remedies
The decision is the latest in a series of decisions where arbitrators are expanding on the traditional remedies of reinstatement and lost wages for unjust dismissal by awarding significant monetary compensation for mental distress and punitive damages. Decisions such as this clearly indicate that there is no immunity for harsh penalties against employers found to have acted in bad faith.
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